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German state elections and unrest in Israel were the main talking points on an otherwise quiet Monday.
A light schedule of data meant currency markets spent more time mulling politics than economics on Monday. Mass protests in Israel prompted hopes that the conflict could soon fade, while the German far-right raised tensions in Europe.
With US markets away for Labor day, major currency pairings were spared a volatile start to the week. The pound treaded water against the euro and the US dollar, as did EUR/USD. That impasse may not last long, particularly as the scheduled programming of data resumes once more.
The few morsels of data that did arrive were barely enough to divert attention. The German HCOB manufacturing PMI figure was revised up slightly to 42.4 in July, although not by enough to obscure falling new orders, purchasing activity and a weaker hiring environment.
China’s Caixin manufacturing PMI score did surprise to the upside, beating market expectations to land at 50.4 in August. That came after July’s 49.8, which was the first time the score failed to beat 50 since October of last year.
The main talking point was geopolitics and its possible impact on global markets. Israeli prime minster Benjamin Netanyahu faced a general strike as citizens reacted angrily to the deaths of six hostages in Palestine. Some commentators have suggested public opposition now makes a ceasefire more likely, although markets seem to be less sure they will divert the course of events.
State elections in Germany resulted in a landmark win for the anti-immigrant Alternative für Deutschland in the Eastern state of Thuringia. German chancellor Olaf Scholz described the AfD’s success as a bitter defeat and warned of right-wing extremism, as the elections highlighted further discord for a troubled Germany.
With the US federal holiday behind us, focus will be trained on ISM manufacturing PMI this afternoon. As we move into Autumn, a frenetic calendar of key events makes protecting your budget from currency risk more vital than ever.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Eight down, four to go
Entering the ninth month of 2024, sterling can look back on a year of strength. Despite some ups and downs, the pound is over 1% up against the euro more than 2% up against the US dollar.
GBP/USD: the past year
EUR: Disquiet in Brussels
The results in the German state elections caused concern in Berlin but also in Brussels. Political leaders there are looking for stability to emerge from an economic downturn. A resurgent AfD is unlikely to help with that.
GBP/EUR: the past year
USD: Bring on Autumn
Labor day typically marks the end of summer and US markets may be looking at September as a chance for a fresh start. The US dollar has slipped lately, but a booming economy could cause a shift in that dynamic.
EUR/USD: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your Private Client Account Manager on 020 7898 0541.
